Apple-HTC, Kodak, Borders, Oracle: Intellectual Property

By Victoria Slind-Flor -
Jul 21, 2011

Apple Inc.’s victory over HTC Corp. (2498)
in a patent dispute at the U.S. International Trade Commission
may slow the advance of rival Google Inc.’s fast-growing Android
operating system for mobile phones and tablets.

A trade judge found on July 15 that HTC infringed two
patents owned by Apple, whose iPhone competes with Android-based
devices, including those made by HTC. If his decision is upheld,
HTC may be prevented from bringing phones into the U.S., and
companies such as Samsung Electronics Co. and Motorola Mobility
Holdings Inc. may find it more expensive to sell Android phones.

Android is poised to be the most-used smartphone software
in a mobile market that may reach $206.6 billion worldwide this
year, according to IHS Inc. Google is under attack from rivals
including Apple and Microsoft Corp. (MSFT) that allege infringement by
handset makers that use Android.

Apple, which also has pending legal fights with Samsung and
Motorola, is looking to thwart rivals rather than extract
payment for use of the patents, making it more likely to hold
out for a ban on imports, said Ron Laurie, managing director of
Inflexion Point Strategy LLC, which counsels companies on
purchasing intellectual property.

“This is not about money,” Laurie, a former patent lawyer
who is based in Palo Alto, California, said in an interview.
“This is about market share in the hottest market out there.”

Taiwan-based HTC said it will appeal Administrative Law
Judge Carl Charneski’s finding, which is subject to review by
the full six-member commission in Washington. The smartphone
maker, Asia’s second-biggest, denied violating Apple’s patents
and said it will use “all means possible” to defend itself in
a statement after the ruling

Google Chairman Eric Schmidt, speaking at a Google Mobile
Revolution conference in Tokyo July 19, said he was “not too
worried” about the litigation over Android.

Android is the fastest-growing operating system in the
smartphone market, according to researcher Gartner Inc. Google’s
software powered half of all smartphones bought in the U.S. in
the six months that ended in March, Nielsen Inc. said.

Among large Android phone makers, HTC faces the biggest
hurdles, because it holds few patents of its own to tempt Apple
into a cross-licensing agreement. Apple may even refuse to
license the patents, said Will Stofega, a program manager at
researcher IDC, leaving HTC struggling to produce a phone that
works around them.

“I don’t see Apple giving an inch,” Stofega said in an
interview.

Apple may be more likely to sign a license accord with
Samsung or Motorola. Still, such deals may involve payments to
Apple that would be passed along to Android customers, said
Florian Mueller, a Munich-based consultant.

Many of Google’s 39 licensees to make phones based on
Android are smaller manufacturers that have far less cash than
HTC, Motorola and Samsung to defend against suits and pay fees
to patent holders, Mueller said.

Mountain View, California-based Google also faces other
claims that Android encroaches on patents. Microsoft, which
makes a rival Windows system for mobile phones, signed four
patent licenses with Android device makers in the past month and
already has a deal with HTC.

Microsoft also sued Barnes & Noble Inc. (BKS) after the
bookseller refused to sign a license for sales of the Android-
powered Nook reader. Oracle Corp. contends that Google used code
from the Java operating system without permission and is seeking
billions of dollars in royalties.

HTC may have some leverage in its dispute with Apple. The
company agreed earlier this month to buy S3 Graphics Co., which
won an ITC patent ruling against Apple in June. HTC also has its
own pending case against Apple.

A final decision in the Apple-HTC case will take months.
The six-member commission is expected to complete the case by
December. If the panel agrees with the judge’s finding, it may
block HTC’s Android phone imports to the U.S. HTC also may seek
an order to delay any import ban until the appeals court rules,
which might take a year or more.

The case is In the Matter Of Certain Personal Data and
Mobile Communications Devices and Related Software, 337-710,
U.S. International Trade Commission (Washington).

The portfolio includes more than 1,100 U.S. patents
including processing, editing and storing digital images,
Rochester, New York-based Kodak said yesterday in a statement.

Kodak’s patents may be worth $2 billion or more and could
attract bids from Apple Inc. (AAPL), Samsung Electronics Co. and LG
Electronics, Mark Kaufman, an analyst at Rafferty Capital
Markets LLC in New York, said yesterday in an interview.

“If you are a large consumer electronics manufacturer,
you’ve got to sit up and take notice,” said Kaufman, who has a
“buy” rating on the shares. “The patents are for cameras, and
as a manufacturer you’re not going to the market today with a
smartphone without a camera.”

David Lanzillo, a spokesman for Kodak, declined to comment
beyond the statement.

Earlier this month, the U.S. International Trade Commission
failed to reach consensus on Kodak’s claims that Apple and
Research in Motion Ltd. infringe its image-preview technology.
It was the second delay by the Washington-based agency in a case
from which Kodak aims to extract $1 billion in licensing fees
from Apple and RIM. Apple and RIM deny infringing the patent.

“The ITC process is taking longer than it should have so
they are looking to get started a competitive bidding process
for the whole portfolio,” said Kaufman. “The company needs
money,” he said.

Kodak said yesterday that there is “heightened market
demand for intellectual property,” according to the statement.
The patents represent 10 percent of Kodak’s total U.S. patent
portfolio, the company said. Kodak hired Lazard Ltd. as an
adviser.

Kodak, which traces its roots to 1880, was founded by
George Eastman, who developed a method for dry-plate photography
and introduced the Kodak camera in 1888, according to the
company’s website.

The company’s credit has deteriorated as it has shifted
from traditional film to digital cameras, accessories and
printers. Kodak, which popularized photography with its Brownie
and Instamatic cameras, has been trying to drum up royalties
from its more than 1,000 digital-imaging patents to fund a shift
to more modern devices.

For more patent news, click here.

Trademark

Borders Says Objections Irrelevant, Contracts Won’t Be Kept

Borders Group Inc., the bankrupt bookstore chain, said 99
objections from creditors are irrelevant because the company’s
liquidation means it won’t carry on any contracts with business
partners.

Starbucks Corp. (SBUX)’s Seattle’s Best Coffee LLC unit said its
intellectual property might be improperly transferred because
trademarked goods such as beverage-making instructions haven’t
been removed from Borders stores.

Borders is scheduled to seek court approval today to
liquidate its 399 remaining stores. All objections from
creditors should be overruled, the company said in court papers
filed July 19.

“Nonetheless, the debtors and the liquidators have been,
and will continue, working to resolve all pending objections to
narrow, if not resolve, all outstanding issues” before today’s
hearing in U.S. Bankruptcy Court in Manhattan, Borders said.

Borders, based in Ann Arbor, Michigan, has about 10,700
employees. A phased rollout will close its stores by September.
The company said it will complete the wind-down under Chapter 11
and expects to be able to pay business partners.

The case is In re Borders Group Inc., 11-10614, U.S.
Bankruptcy Court, Southern District of New York (Manhattan).

For more trademark news, click here.

Copyright

Evangelical Church Seeks Destruction of ‘Salvation Boulevard’
Film

Comcast Corp., a unit of Sony Corp., IFC In Theaters LLC,
and Mandalay Pictures LLC were all sued for copyright
infringement by a 125-year-old evangelical church.

The suit, filed July 14 in federal court in Chattanooga,
Tennessee, is related to Mandalay’s “Salvation Boulevard”
film. The church seeks the destruction of all copies of the
film.

“Salvation Boulevard,” based on a novel of the same name
by Larry Beinhart, was released July 15. The film is a comedy
about a charismatic evangelical pastor, played by Pierce
Brosnan, who is involved in a real estate development in a small
western town.

The Church of God, based in Cleveland, Tennessee, claims
the film uses a cross design that is “a substantial
reproduction” of its own cross mark. The mark seen in the firm
is a mirror image of the church’s mark, for which it has a
copyright registration.

Included in the complaint are two still photos from the
film, one showing a cross mark displayed on the front of the
fictional Church of the Third Millennium. A second photo shows a
character from the film wearing a vest embroidered with a cross
mark.

These marks are used without license from the church,
according to court papers. The church claims that the use of the
allegedly infringing symbol in the film is likely to “engender
a false belief in the minds of the public and persons in the
trade and industry in general” that an affiliation exists
between the church and the film. This causes “irreparable harm,
damage and injury to the church,” according to court papers.

The church asked the court for an order barring the
unauthorized use of its mark, and an accounting and award of the
profits from sales and other activities related to the
“Salvation Boulevard” film for goods and services that bear
the allegedly infringing symbol.

It also seeks an order for the destruction of all films,
and promotional materials containing the infringing mark, and
awards of money damages, attorney fees and litigation costs.

None of the defendants responded immediately to an e-mailed
request for comment.

The case is Church of God v. Mandalay Pictures LLC, 1:11-
cv-00189, U.S. District Court, Eastern District of Tennessee
(Chattanooga).

Oracle, Google Spar Over Stay in Patent and Copyright Case

Oracle Corp. (ORCL) and Google Inc. are at odds about the pace of
the billion-dollar copyright and patent-infringement suit
between the two companies.

In a filing yesterday in federal court in San Francisco,
the parties updated the court on the reexamination of six of the
seven patents at issue in the suit Oracle filed against Google
in August. According to that filing, the U.S. Patent and
Trademark Office has rejected the claims of four of the six
patents under consideration.

The patent office hasn’t issued any office actions for two
other patents, and has confirmed that the claims in the seventh
patent are patentable.

Oracle told the court there’s no reason to put the case on
hold. To do so would cause the court “dramatic disruption,”
the Redwood City, California-based software company said. A
stay is unwarranted and “would be highly prejudicial to Oracle,
the company said.

It claimed that the court “should not surrender control of
its docket to an overburdened administrative agency,” noting
that the backlogs are growing at the patent office, “with over
20,000 appeals pending, 1,100 more being filed every month and
only about 570 dispositions per month.”

Each day the trial is delayed, Oracle argued, “the more
damage is done to Oracle.”

Google argues that it’s practical to put the case on hold
until the patent office determines which claims in the patents
survive reexamination.

It argued that even though the patent office has rejected
some of the patent claims, “Oracle continues to assert 50
claims in seven patents and has stepped up its harassing and
burdensome discovery tactics, leaving the case in a condition
that is far from trial-ready.”

The Mountain View, California-based search-engine company
said it would be willing to go to trial at the set date in
October, only if Oracle reduced its patent claims “to a number
reasonably triable in the three-week trial.”

“Indeed, should this case be narrowed to only a few claims
modified in the course of the reexamination, any damages claim
would be materially limited by, among other things, the doctrine
of intervening rights,” Google said in its filing. “Such a
narrowed case will also eliminate the need for those efforts
specifically directed at the claims rejected through
reexamination, including motion practice, expert reports, and
other trial preparation, as well as make it more likely that the
parties could reach an informal resolution of the matter.”

The case is Oracle America Inc. v. Google Inc. (GOOG), 10-03561,
U.S. District Court, Northern District of California (San
Francisco).